With high gas and diesel prices, crude oil is like gold. When you think of oil, you likely think of Alaska, Texas and Oklahoma, but how about Nebraska?

The race for oil in Nebraska was on in the 1930s. The Nebraska Legislature offered $15,000 for the first oil well in the state that produced 50 barrels a day for 60 consecutive days. A vein in the southeast part of the state was rumored as early as 1883. In the ’30s, the pain of the Great Depression on farms, ranches and rural communities made the possibility of finding oil quite attractive.

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Can you imagine the excitement of local landowners in Richardson County when it was announced in November 1938 that oil was being drilled at three sites; and potential oil and gas leases were being offered? One year later, Pawnee Royalty Co. had obtained oil from its Boice well. But it was the third well, Bucholz No. 1, which began pumping in April 1940 and producing an average of 169.5 barrels a day for the first 60 days, that earned the bonus money from the Legislature.

Fast-forward 80 years, and oil wells in 19 counties, mostly located in the southwest and Panhandle, produced a total of 1.673 million barrels, or 4,584 barrels a day, in 2020, according to the Nebraska Department of Environment and Energy. This production was down 13% from 2019, when Nebraska wells produced 1.912 million barrels, or 5,268 barrels a day.

Production down

Production from 2020 — with complete numbers not yet assembled from 2021 — was the lowest since production records started being kept in 1950. In those early days of oil drilling, production skyrocketed to over 12 million barrels by 1955. The highest total production for the state occurred in 1962, when Nebraska wells produced nearly 25 million barrels of oil, or over 68,202 barrels a day. While nothing near to those numbers, as recently as 2014, the state’s wells were pumping over 3 million barrels a year, and in 1986, they produced over 7 million barrels.

Hitchcock County was the top-producing county in 2020, pumping 579,165 barrels. Dundy County was next, followed by Kimball County. On the low production side, Sioux County had oil wells producing 590 barrels in 2020, with Lincoln County slightly ahead of that, pumping 603 barrels.

What about Richardson County, where the first oil well in the state was located? While the mini oil boom of the 1940s caused a lot of excitement, it did fizzle out. The Bucholz well that garnered the bonus money from the Legislature pumped 330 barrels a day. But there was a lack of refineries in the area, so the “boom” part of the excitement waned after three years of intense activity. These days, the county produced 70,359 barrels in 2020, down slightly from just over 80,000 barrels in 2019.

Western boom

Interest in oil in the western part of Nebraska dates to 1889, with the first recorded drilling taking place near Chadron in 1903. The first — albeit unsuccessful — attempt at drilling in the southern Panhandle took place in 1917 near Harrisburg. Exploration teams found their first successful well southeast of Gurley in Cheyenne County in 1949, pulling 225 barrels a day from a depth of 4,429 feet.

Crude oil production in Nebraska in 10-year intervals shows the up and down production and market cycle of oil in the state.

While Nebraska is not known to have significant natural gas reserves, according to the U.S. Department of Energy, the state has modest petroleum reserves equal to less than 0.1% of the nation’s total. This may not sound like much, but the massive Denver Basin extends into the southwest and Panhandle counties, where most of the state’s crude oil is produced. The Forest City Basin covers parts of southern Iowa, northern Missouri, northeast Kansas and Richardson County in Nebraska.

There are about 1 million producing oil wells across the U.S., but the number of active wells in Nebraska has remained stable, with 1,571 producing wells reported in 1960 from NDEE data, and 1,429 producing wells reported 60 years later in 2020. The high-water mark for number of wells was 1983, when 2,100 wells were reported.

New discoveries

There are still new oil fields being found. For instance, oil was first discovered in Franklin County about 10 years ago, and production there ramped up to 56,477 barrels in 2018, falling back to 32,688 barrels in 2020. Likewise, wells in Kearney and Phelps counties just started registering production in 2019, producing 2,280 barrels in Kearney County and 30,221 barrels in Phelps County.

Exploration continues, with new wells being “spudded,” which is the process of beginning to drill oil wells, in Banner, Chase, Dundy, Harlan, Hitchcock, Kimball, Richardson and Sioux counties in 2020, says Stan Belieu, director of the Nebraska Oil and Gas Commission.

“Most of the new oil produced in the U.S. comes from the use of 2-mile-long horizontal holes that are completed as producing oil wells through the use of hydraulic fracturing,” Belieu says. “This new technology, termed the ‘shale revolution,’ has transformed the domestic oil and gas industry.”

In Nebraska, there are geologic formations that contain these “tight” oil sands, but the application of this technology, while technologically successful, has not yet seen economic success, he adds.

“3D seismic has been a very successful tool for oil exploration in southwest Nebraska,” Belieu notes. While there have been a dozen or so horizontal wells drilled so far, if current oil prices stay high, there likely will be more attempts to make these types of wells economically successful, he says.

You can learn more about Nebraska oil production on the NDEE website.